Plans for borrowing next year
At this difficult juncture for the Greek bond market and the economy in general, the government will have to draft its borrowing policy for 2010 within the next couple of weeks. Plans for next year, according to the draft budget, will be particularly tough as they provide for the borrowing of 54.6 billion euros, the second highest sum after the 64 billion euros, which is the estimated amount for the current year. Sources suggest that the general guidelines will be similar to this year. Although nothing has been set in stone, with talks between the Finance Ministry and the main negotiators in the local bond market still pending, it appears that the state will opt to satisfy a considerable part of its needs through short-term borrowing next year as it did this. The rest of the amount is set to come from issues that will not exceed 15 years. The method of private placements will continue next year as well, while the issuing of bonds in foreign currencies will be one of the measures the government will consider. The state is also poised to face an additional obstacle next year in the gradual reduction of the cash flow form the European Central Bank. In 2009, Greek banks supported the state’s borrowing program, as they could then borrow from the ECB at a low interest rate, therefore securing gains from the difference in rates, while also serving the state’s needs. Government officials express optimism that Greece will have no problem in borrowing the funds it will require in 2010, just as it did this year.
